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Six Sigma Application in Healthcare Logistics A FR PDF
Six Sigma Application in Healthcare Logistics A FR PDF
Research Article
Six Sigma Application in Healthcare Logistics: A Framework and
A Case Study
1
Department of Industrial Engineering, The University of Jordan, Amman, Jordan
2
Graduate School of Business Administration, The German Jordanian University, Amman, Jordan
3
Department of Project Management, Incube Mobility Solutions, Amman, Jordan
Copyright © 2019 Lina Al-Qatawneh et al. This is an open access article distributed under the Creative Commons Attribution
License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is
properly cited.
Six Sigma is used heavily in various industrial sectors, yet no noticeable applications are seen in healthcare logistics. This paper
reveals the special case of healthcare logistics where cost reduction is not the only factor considered in project selection;
performance and criticality of each item in the logistics system are of high importance as well. This paper provides a proposed
framework to apply Six Sigma in the area of healthcare logistics. It also presents a case study implementing the proposed
framework at a Jordanian hospital. In the case study, the paper reveals how the modifications of the define phase to take into
consideration the criticality, cost, and performance of items make typical Six Sigma methodology very beneficial for healthcare
logistics. In addition, it shows how the Six Sigma project selection can be done to deal effectively with healthcare logistics issues.
This paper paves the road for research to elaborate on ways to use Six Sigma in the area of improving healthcare logistics.
Index that correlates criticality, cost, and performance of attention in practice. Jin et al. [19] presented a detailed case
products in healthcare logistics. study of applying the principles and procedures of Six Sigma
This paper is organized as follows. Section 2 provides a and Lean thinking in designing and operating a healthcare
literature review of Six Sigma and its application in logistics centre in North Mississippi. Craven et al. [20],
healthcare logistics, followed by a literature review of what through brief case studies, highlighted some representative
healthcare logistics involves. In Section 3, the proposed Six Sigma projects conducted in various departments at New
framework for applying Six Sigma in healthcare logistics is York–Presbyterian hospital. Their study described how an
presented in detail. In Section 4, an empirical case study inventory management project that used Lean Six Sigma
from healthcare is given to explore the effectiveness of the methodology resulted in the identification and removal of
proposed framework. In the last section, the findings of this expired medication and products. Lifvergren et al. [21]
research are discussed. described the lessons learned from 22 Six Sigma projects
implemented by a Swedish hospital—two of which were
related to logistics. Their study provided a summary of the
2. Literature Review
project purpose, whether the project reached its intended
2.1. Six Sigma. Six Sigma was originally developed in the results and the net cost savings in the first year after the
mid-1980s by Motorola as a quality control method to implementation of the suggested solutions. A critical
prevent defects in their manufacturing process [8] and has analysis overview of the important publications is presented
been evolved into a project-driven management approach to in Table 1.
improve the organization’s products, services, and processes
by continually reducing defects in the organization [9]. Six
Sigma is defined in a variety of ways by several authors. From 2.3. Healthcare Logistics. In healthcare, logistics systems are
a statistical perspective, Six Sigma is defined by Motorola as a complex and more problematic to manage compared to
quality improvement program with a goal of reducing the other sectors. This is due to the wide product range, the high
number of defects to as low as 3.4 parts per million op- value of products involved, and the perceived need to supply
portunities [10]. From a business perspective, Six Sigma is a very high level of services for most items [22]. The wide
defined as a business strategy used to improve business variability in product ranges is caused by the high differ-
profitability and to improve the effectiveness and efficiency entiation among available products, the subjective role of
of all operations to meet or exceed the customer’s needs and physicians in choosing these products [23], and most im-
expectations [11]. portantly, the large volume of diverse support services re-
Zu et al. [12] identified three practices that are critically quired to deliver the end product–patient care. Moreover,
associated with Six Sigma implementation: Six Sigma role healthcare providers are unable to predict patient mix and
structure, Six Sigma structured improvement procedure, hence unable to predict and control the demand of products
and Six Sigma focus on metrics. The role structure of Six [3].
Sigma is often referred to as the “belt system.” Six Sigma Products used in hospitals can be classified into cate-
identifies several key roles for its improvement specialists: gories based on the level of criticality to patient care. Al-
champions, master black belts, black belts, and green belts though critical items constitute a small number of items, the
[13, 14]. Those specialists are assigned different levels of roles majority of the total inventory investment is in critical
and responsibility and work together in a hierarchical co- items—around 60% [24]. Critical items are usually ex-
ordinated mechanism across multiple organizational levels tremely expensive, have short shelf-life, and/or require ex-
to achieve the Six Sigma goals. pensive storage facilities on-site. What makes hospital
Six Sigma uses two major structured methods for im- logistics more complex is the criticality of some items used
provement known as DMAIC (define-measure-analyse- and the patient’s life-threatening situations that could
improve-control) and DMADV (define-measure-analyse- happen due to the unavailability of these items in stocks. This
design-verify). The DMAIC method is used for process distinctive feature of hospital logistics may require different
improvement [15], while the DMADV is used for product management policies than those used for other industries
and process design [16]. The highlight of the DMAIC logistics systems. Al-Qatawneh and Hafeez [25] proposed a
method is the five-phased methodological framework that multicriterion critical-to-life classification technique for
guides in conducting the improvement project [17, 18]. In managing inventory in a healthcare supply chain. Their
the first four phases, various managerial and statistical tools findings suggest that the proposed classification allows for
are used in a manner that makes it easy to understand the assigning a particular service level to each item to ensure the
process and its issues as well as finding the proper root availability of items that are critical to patient life and deduce
causes of the problem and coming up with the proper so- the optimal inventory level.
lutions. The last phase ensures that the root causes of the The literature of Six Sigma application in healthcare
problem seize to exist and the process will never go back to logistics showed that no work is available that considers
its old ill state. explicit interrelations between criticality of items and
problem definition in a Six Sigma project. To answer this
deficiency, this paper proposes the use of an Importance
2.2. Six Sigma Application in Healthcare Logistics. The ap- Index that correlates criticality, cost, and performance to
plication of Six Sigma in healthcare logistics had very little select the Six Sigma project.
Journal of Healthcare Engineering 3
Cost level indicates the cost of the item based on the department, which will be referred to as “department
critical to quality (CTQ) parameter decided by VOC, and it warehouse.” The department warehouse contains a one week
equals 1 for low cost items, 5 for medium cost items, and 9 stock of most frequently used items by the department. In
for items with high cost. this paper, the application of Six Sigma is done only on the
Performance level indicates the performance of the item medical supplies warehouse.
based on a CTQ parameter decided by VOC, and it equals 1
for excellent performance, 5 for medium performance, and 9
4.1.2. Define the Parameters That Will Be Used to Assess the
for poor performance. The estimation of the level is done
Process Performance. Determining the CTQ parameter that
twice, once by the process owners and the second by the Six
will be used for assessing the logistics system performance
Sigma team.
for medical supplies was based on the voice of the customer.
The project with highest Importance Index (II) value will
A questionnaire was designed, and a survey was conducted
be selected. The II values can range between 0 (for a project
which included internal customers (warehouse keepers)
on an item that is on target for all the three levels mentioned)
from the targeted warehouse, and four other secondary
and 27 (for a project on an item that has its performance
warehouses included emergency room (ER) department
characteristic at the poor end of the scale, is highly critical to
warehouse, operations room (OR) department warehouse,
patients, is a costly item, and is off target for all the three
cardio department warehouse, and extension ward ware-
levels).
house. The total number of respondents was five warehouse
Notice that a Six Sigma project will try to decrease the
keepers. The survey required process owners to rank the
value of II. The criticality value is hard to minimise, still, it
suggested CTQs in the questionnaire as high, medium, or
can be minimised through creating alternatives, minimising
low in terms of importance in performance assessment.
the effect of stock-out, shortening the time of replenishment,
Then, a simple scale system was used for ranks, such that (5)
etc. The performance level and cost of operation are typical
indicated high importance, (3) medium importance, and (1)
Six Sigma improvement projects, where projects are con-
low importance. Table 3 shows the suggested CTQs and their
ducted to reduce the gap between the current and the tar-
average rank according to the survey findings. Table 3 shows
geted situation.
that “average inventory level” has the highest average CTQ
In the improve phase when selecting between alterna-
rank of 4.6 which makes it the most suitable CTQ to assess
tives, we select the alternative that is expected to have the
the logistics system performance based on VOC.
greatest impact on decreasing the II value after imple-
menting the new process changes. Also, the Six Sigma
project success can be measured by the amount we reduce 4.1.3. Define the Parameters That Will Be Used to Assess the
the value of II in the project. Criticality Level of Products. This step too was based on the
The intriguing part of the proposed methodology is that VOC. Another questionnaire was designed, and a survey was
it can be used to deal with various areas of healthcare lo- conducted which included internal customers (doctors,
gistics. These areas vary from inventory control to trans- nurses, and warehouse keepers) from different departments;
portation, warehousing, supplier management, customer this survey had a total of 16 respondents. The survey re-
service, and demand forecasting. quired customers to rank the suggested criteria in the
Table 2 reveals our step by step framework that can be questionnaire as high, medium, or low in terms of suitability
used effectively to tackle healthcare logistics. The framework for criticality assessment. Then, a simple scale system was
is a proposed modified Six Sigma methodology that fits used for ranks, such that (5) indicated high suitability, (3)
healthcare and its logistics system. medium suitability, and (1) low suitability. Table 4 shows
suggested criteria and their average rank according to the
4. Case Study survey findings. Table 4 shows that both “time needed to get
product from the nearest distributor warehouse” criterion
Our case study organization is a general hospital from the and “effect of stock-out incidents or problem caused by
private sector in Jordan. Due to confidentiality, we will refer stock-out condition” criterion have the highest average rank
to it as the case hospital. The following sections will discuss of 4.1 which makes them the most suitable criteria for
in detail the application of the proposed framework different assessing the criticality of medical supplies based on VOC.
steps shown in Table 2 at the case hospital.
4.1.4. Define the Parameters That Will Be Used to Assess the
4.1. Define Phase Cost Level of Products. Determining the parameter that will
be used for assessing the cost of medical supplies will be
4.1.1. Fully Define the Process. A clear knowledge of the case
based on item purchasing cost. A simple scale system was
hospital’s logistics system was acquired. The case hospital
used for ranks, such that (5) indicated high cost, (3) medium
conducts two main logistics activities: warehousing and
cost, and (1) low cost.
inventory management. The case hospital has four main
warehouses: medical supplies warehouse, nonmedical sup-
plies warehouse, maintenance warehouse, and pharmaceu- 4.1.5. Assess Performance, Criticality, and Cost by Process
tical supplies warehouse. In addition to the four main Owners or Management. All items at the medical supplies
warehouses, there is a secondary warehouse located at each warehouse were assessed according to the “average inventory
Journal of Healthcare Engineering 5
Table 2: Continued.
Phase Steps Description
Carefully observe the as-is process and use value stream analysis to
improve it, this may include:
(1) Improve the process (i) Eliminate or minimise non-value added activities
(ii) Develop and apply standards
(iii) Move inspection points forward or eliminate them
Analyse
Use tools like Pareto charts or fishbone diagram to determine
(2) Find root causes affecting criticality, performance
significant causes responsible for the low performance level, high cost
and cost
level, and high criticality level
Suggest process changes alternatives needed to improve current
(3) Develop alternative solutions
situation of the criticality, performance, and cost levels
(a) Study the Importance Index expected enhancement for each
alternative
(b) Perform risk analysis for each alternative
Improve Implement the new improved process (c) Use prioritization matrix to list features of each alternative. Every
feature should have weight related to the item’s criticality and cost
(d) Implement the best alternative that will have the largest effect on
reducing II
(a) Write quality manuals
(b) Set key performance indicators to measure performance and a plan
Define and implement controls to guarantee the
Control to use them
process will not go back to its unhealthy state.
(c) Employees training program to maintain skills and transfer
knowledge
∗
Pie chart, histogram, scatter plot, and control chart.
Table 3: Suggested criteria and average rank of CTQ questionnaire. Table 4: Findings of VOC used to determine criticality categori-
zation criteria.
Potential CTQ Average CTQ rank
Average inventory level 4.6 Average criteria
Suggested criteria
Inventory holding costs 4.2 rank
Number of expired items 4.2 Effect of stock-out incidents or problems
4.1
On-time delivery 4.2 caused by stock-out conditions
Supplier reliability 4.2 Time needed to get the product from the
4.1
Safety stock level 3.8 nearest distributer warehouse
Number of stock-out incidents 3.8 Availability of product in the nearest
4.0
Actual time to get product from warehouse 3.8 distributer or manufacturing warehouse
Effect of redundant purchases 3.0 Ease of acquiring the item during diagnosis or
3.8
Variability of demand 2.8 operation from store
Shelf life 2.6 Accessibility of item at store after working
3.5
Transporting costs 1.4 hours
Number of alternative products in the
3.3
hospital or local market
level” parameter that defines the performance according to Unavailability of item due to maintenance or
3.0
VOC. The warehouse keepers (the process owners) classified cleaning
the items as having high performance, medium performance,
and low performance. Also, the keepers estimated the desired Based on VOC, two criteria were chosen to be used for
targeted performance for each item and measured the gap. assessing the criticality of medical supplies, the criteria
High-performance items are items whose average inventory is are “time needed to get product from the nearest dis-
well matched to the demand. Medium-performance items are tributor warehouse” and “effect of stock-out incidents or
items whose average inventory is less matched to demand. problem caused by stock-out condition.” All items at the
While, low-performance items are items whose average in- medical supplies warehouse were checked for criticality
ventory is much higher than the quantity needed to cover the with the process owners (doctors and nurses), then
demand. A simple scale system was used to rank items in classified into high, medium, or low criticality level, and
terms of performance level, such that (1) indicated high finally process owners estimated the desired targeted
performance level, (5) medium performance level, and (9) low criticality for each item and measured the gap. High-
performance level. Then, depending on the gap between the criticality items were those for which a stock-out con-
performance level and desired target level, the level was dition was life-threatening for the patient. Medium-
multiplied by the factor F3, such that the larger the gap, the criticality items had less effect on the patient in case of
higher the value of the factor F3. The factor F3 has a value a stock-out but did affect the diagnosis or treatment. Low-
between zero and one. criticality items were of almost no effect in case of stock-
Journal of Healthcare Engineering 7
out except the inconveniences of the patient. A simple 4.2.5. Calculate Performance Index. Using the output of the
scale system was used to rank items in terms of criticality 3 steps above, the levels were set, and factors were then
such that (9) indicated high criticality, (5) medium estimated depending on the desired targeted levels provided
criticality, and (1) low criticality. Then, depending on the by process owners in the define phase. The Importance Index
gap between the criticality level and desired target level, was calculated for all items at the medical supplies ware-
the level was multiplied by the factor F1, such that the house by the Six Sigma project team. Again, as a sample for
larger the gap, the higher the value of the factor F1. The demonstration in this paper, Table 6 shows the Importance
factor F1 has a value between zero and one. Index calculated by the Six Sigma team for the same sample
Cost indicators were based on purchasing cost data that of items in Table 5. As a result of this step, the II values for
were acquired from the procurement department, and then, “Intra-aortic balloon” and “Seroquel 300 mg tablet” are still
process owners estimated the desired targeted cost for each the highest among all items. Therefore, the project selection
item and measured the gap. A simple scale system was used done during the define phase is still valid, and the Six Sigma
to rank items in terms of cost such that (9) indicated high team proceeded the work with the defined project (reduce
cost, (5) medium cost, and (1) low cost. Then, depending on the II value for Intra-aortic balloon and Seroquel 300 mg
the gap between the cost level and desired target level, the tablet).
level was multiplied by the factor F2, such that the larger the
gap, the higher the value of the factor F2. The factor F2 has a
value between zero and one. 4.3. Analyse Phase
The Importance Index was calculated for all items at the 4.3.1. Improve the Process. The Six Sigma team carefully
medical supplies warehouse depending on the process observed the as-is process and used value stream analysis to
owners’ evaluation of the three levels and the gap from target improve it, which included eliminating and minimising
assessment. As a sample for demonstration in this paper, nonvalue-added activities, developing and moving in-
Table 5 shows the Importance Index calculations for some of spection points forward, or eliminating them. Figure 2
the items. Note that the two items with the highest II value shows the improved process. Changes done to reduce the
among all items were included in the sample in Table 5. process complexity included:
These two items are “Intra-aortic balloon” and “Seroquel
300 mg tablet.” (i) The check of the items’ quantity on hand is done
after giving the medicine to patients rather than a
weekly check. This eliminated the possibility of
4.1.6. Define Project Goals. The project goal is to reduce the having stock outs as the check is done after each
II value for Intra-aortic balloon and Seroquel 300 mg tablet. prescription is given.
(ii) Rather than having the main warehouse keeper fill
the purchasing request and then send it for the
4.2. Measure Phase warehouse manager for approval, a meeting is
4.2.1. Map Current Process. Based on the acquired knowl- conducted were the warehouse manager approves
edge in the define phase, the information and material flow the requests and then the keeper fills them and sends
chart of the logistics system at the case hospital were de- them to the purchasing department.
veloped as shown in Figure 1. (iii) Shipment inspection is done at the supplier side to
save time.
300 mg tablet.” A cause-and-effect diagram was developed to alternatives each time a purchase is done to reflect that on
summarise the possible causes of having low performance the quantity purchased. Another suggestion was to set up a
level that is causing a high II value for the “Seroquel 300 mg policy to buy items depending on demand forecasting rather
tablet” as shown in Figure 3. than on offered discounts. The hospital is recommended to
The whole picture of this problem developed from conduct demand forecast for all important items stored and
further analysis of the causes listed in Figure 3 was sum- order them depending on forecasted demand. The last
marised as follows: suggestion was to implement the first-in-first-out (FIFO)
“Seroquel 300 mg tablet” was the favourite medication method within the warehouse and not to buy new products
for a large number of neurology physicians and the demand while still holding considerable stock from it, from its
for it was high. Since the cost of “Seroquel 300 mg tablet” is equivalents or from its older version products.
rather high, the supplier offered a good bargain based on
quantity discount principle. The purchasing officer saw this
to be a good chance of saving on the long run and agreed to 4.4. Improve Phase. The new improved process (developed
the supplier’s deal. Before the last lot of “Seroquel 300 mg in Section 4.3.1) was implemented at this phase. Also, at this
tablet” was consumed, a new generation of the same brand of stage and after selecting the alternatives to be implemented
“Seroquel 300 mg tablet” was available on the market. Be- for reducing the II index, the Six Sigma team met with the
cause the new generation is an improved one, it became the process owners; explained the alternatives, the selection
physicians’ new favourite. At almost the same time, a local criteria for the best alternative and the selected alternative.
less-expensive alternative to “Seroquel 300 mg tablet” was The selected alternative was then implemented and the
available on the market. Since this alternative was less ex- improvement resulted from its implementation was mea-
pensive and approved by the Ministry of Health, many sured. Mainly, the implementation of selected alternative
physicians switched to prescribing it. resulted in reducing the gap between the performance level
All the above causes combined led “Seroquel 300 mg and desired target level which in turn resulted in reducing
tablet” to have a low performance level (i.e., its average the II value for both: II for “Intra-aortic balloon” and
inventory is much higher than the quantity needed to cover “Seroquel 300 mg tablet” were reduced by 25% and 33%,
the demand). However, it was agreed that the main cause of respectively. Even though customer satisfaction rates were
this problem is purchasing large quantities of “Seroquel not compared before and after the project, it is expected to
300 mg tablet” at quantity discount. see a marked improvement as well.
4.3.3. Develop Alternative Solutions for the Problem. 4.5. Control Phase. Six Sigma control phase ensures that all
After studying the cases that led to having a high II value for root causes of the problem seize to exist and that the process
“Seroquel 300 mg tablet,” the Six Sigma team developed will never go back to its old state. For this purpose, a guide
some suggested solutions to reduce the high II value for this with all the suggestions above was created for all warehouses’
item. staff members and for the material management staff and an
One of the suggestions was to set up a “sale represen- evaluation system was set to study employees’ compliance
tatives’ affair office” where his/her main task is to receive with the guidelines.
offers from sales representatives of medical supplies without
representatives approaching physicians directly. This is 5. Conclusions and Future Work
hoped to guarantee that physicians’ choices of medical
supplies are purely according to the medical benefits re- Six Sigma is a pioneer problem-solving technique and a
gardless of the supplier-physician relationship. leading process improvement method. We presented how it
The rest of improvement options were directly related to can be used effectively to deal with healthcare logistics issues,
the current policies used for material management. One of including deciding the major problems to be solved and
the suggestions was to set up a policy concerning checking solving them. We also showed that some tools used for
up for new development on current medical supplies or manufacturing applications might not be very useful in
Journal of Healthcare Engineering 9
Is there enough
material stock?
Is quantity
below reorder
point?
Yes
Yes
Prepare
prescribed
Warehouse
materials for
keeper fills
the patient No
purchasing
request
End
Purchasing
request is sent to
warehouse
Review returned manager
medical supplier Fill internal
shipment and amend request form
changes Is request
approved?
Send internal
request form to
No main warehouse
Warehouse
keeper reviews Yes
the request Receive supplies
and store them
in department
Send copy of warehouse
request to
purchasing
department
Receive supplies
and check them
Are they as
ordered?
Yes
No
Store supplies in
main warehouse
Return shipment
service applications such as healthcare logistics without reveals a new practical method to select projects based on
modifications, so we built a framework that could be used to criticality. Second, it showed how we can include competing
select and implement Six Sigma projects. performance measures in one calculated measure we called
This work revealed new contributions on all the published importance index. Third, it revealed a framework that is in line
work especially those shown in Table 1 in many ways: First, it with Six Sigma teachings and with decision maker’s priorities.
10 Journal of Healthcare Engineering
Check remaining
Order items No Check remaining
amounts of
medical supplies stock
Is quantity
below reorder Is there enough
point? stock for one-day
usage?
Yes Yes
No End
Warehouse keeper
and manager meet Fill internal
to fill purchasing request form
request and send it
Review returned to purchasing Send internal
medical supplier department request form to
shipment and amend main warehouse
changes Receive supplies
and check them
Receive supplies
and store them
Are they as in department
ordered? warehouse
Yes
No
Store supplies in
main warehouse
Return shipment
This article paves the road for research to elaborate on different types of hospitals, and report case studies in future
ways to use Six Sigma in the area of improving healthcare research.
logistics, especially that this area of research is almost un- For hospital management, this work reveals the idea of
touched thus far. This research can be completed and prioritization of all stocked items based on criticality, cost,
complimented by others who can use this methodology, and performance. Hospitals should use the II calculations for
conduct calculations of the importance factor, check the all items in stock in order to establish current-status review
model validity and implement it in other countries and and continuous performance reviews for all items at stocks.
Journal of Healthcare Engineering 11
People Materials
No optimization of
purchase quantities
No
Buy large forecasting
quantities when
discounted Methods
Figure 3: Cause-and-effect diagram showing possible causes of the low performance level for Seroquel 300 mg tablets.
Six Sigma is a management tool. Hospital management Engineering, Science and Technology, vol. 6, no. 3, pp. 85–95,
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International Journal of
International Journal of Antennas and Active and Passive Advances in
Chemical Engineering Propagation Electronic Components Shock and Vibration Acoustics and Vibration
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